Make Sense of This! An iPhone X Sales Alternate Reality

December 19th, 2017

For the longest time, you’ve read stories about why the iPhone X was fated to be unsuccessful. First and foremost, it was too expensive. How dare Apple charge $1,000 for a smartphone? Even when Samsung came out with the Galaxy Note 8, listing for about $50 less without counting discounts, it wasn’t such a big deal.

But Apple?

Imagine how they felt when it was announced that the 256GB version would sell for $1,149? But it’s also true that many people just put the purchase on their credit cards, so they’re paying a small amount per month, or they sign up for one of a carrier’s lease/purchase plans. I realize such plans aren’t offered in many countries, but in the U.S., you can sign up to plans where you pay forever, more or less, but you are eligible to trade back your smartphone and get a new one without penalty every year, every 18 months, every two years. Your monthly payment depends on how often you want to upgrade.

What this means is that the “exorbitant price” of the iPhone X may actually be affordable, only a few dollars more than the cheaper product.

The other complaints were about availability, that Apple couldn’t meet demand and thus you would be forced to wait weeks or months to get one. Forget about holiday giving. That happened at the same time some suggested sales weren’t so hot. I suppose you get the disconnect.

So today I read a piece at a site, unnamed, which claimed that iPhone X sales were poor. The source? An alleged industry analyst, Karl Ackerman, from Cowen and Company, who concluded they were much lower than Apple hoped. There doesn’t seem to be much to back up this claim, and it clearly flies in the face of other analysts who reported that sales were, to be blunt, just great.

Indeed one of those reports indicates that Apple is selling one million iPhone 8’s and one million iPhone X’s each and every day. Samsung would love to be able to do even a fraction of that business with those Galaxy smartphones. Yes, even though the Samsung Galaxy S8 earns a very slightly higher rating than any iPhone from Consumer Reports, that evidently isn’t translating to higher sales.

So what about the view of iPhone sales from a different reality, one hopes this one?

Well that survey comes from Localytics, a firm that bases its conclusions on monitoring of some 70 million iOS devices, and calculating the percentage of the new models that have been activated, which means they are now in use.

At least these are hard numbers, based on a sampling. It’s not someone making a claim about poor sales without much in the way of provable data. But the lower sales reports were enough to set Apple critics afire. One talked of the “Osborne Effect,” the practice of pre-announcing something altogether new and thus hurting sales of current gear. But that usually refers to a new product that’s very late.

It doesn’t apply here. Apple announced the new iPhones at the same time, and only postponed delivery of the iPhone X by a few weeks compared to the iPhone 8. People could still decide which model to purchase, because the delay wasn’t all that significant. Well, except at first where preorders slipped to five to six weeks before catching up quickly.

So Apple is close to balancing supplies with demand. You stand a decent chance of getting next-day or wo-day delivery of an iPhone X, or even pick up the one you want at a nearby store. That’s quite unlike the AirPods, where deliveries are now delayed until January at the earliest.

But that doesn’t mean iPhone X sales are poor. According to the numbers from Localytics, as of Friday, November 17th, some 11.2 million iPhone X’s were sold. That’s just two weeks after it went on sale. In passing, it’s interesting to note that the iPhone 8 Plus was outselling its smaller sibling, with some 18.6 million sold since the late September launch, which includes the previous fiscal quarter. Don’t forget that the larger iPhone 8 is $100 more expensive than the smaller one!

How does that relate to the claim that higher prices must always put off customers?

Localytics estimates that, after the iPhone X came out, its sales rate exceeded those of the other two models, and thus Apple is on track to meet or exceed its guidance for this quarter. That means possible sales of over 80 million iPhones, an all-time record.

To be fair, one shouldn’t assume that any one set of numbers based on a sampling is accurate. But if it’s even in the ballpark, it puts the lie to the claim Apple’s new iPhones aren’t doing so well.

But there’s more. Investment analyst Amit Daryanani from TBC Capital Markets says there’s high demand for the 256GB iPhone X in China. It also appears that higher demand for larger capacities — obviously the more expensive models — is typical in other countries.

That, however, hasn’t stopped those inveterate Apple critics from claiming, without evidence, that people are rejecting expensive gear from Apple. Or maybe they are hoping to dissuade people from buying iPhones by demagoguing, a tried and true example of political gamesmanship.

In any case, this game of dueling analytics will end once Apple releases its results for the December quarter next year.

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